The dedicated system segment of the video conferencing market continues to decline, falling 6% in Q1 2016 versus the same period last year.
Although endpoint demand remains steady, infrastructure sales are plunging as alternative approaches such as embedded, virtual and cloud-based multipoint control units (MCUs) gain acceptance, according to Matthias Machowinski, Senior Research Director, Enterprise Networks and Video, IHS Technology.
Q1 2016 video conferencing revenue declined 22% quarter-over-quarter to $701m due to lower seasonal demand. Overall, videoconferencing revenue is also trending down slightly on a year-over-year basis, primarily due to decreases in infrastructure sales.
Demand for video conferencing endpoints is still growing, but the shift to cloud services is displacing a significant amount of infrastructure equipment revenue - two highlights in Q1 2016 were PBX-based video and immersive telepresence.
PBX-based video has proven popular because it offers organisations a cost-effective way to enjoy multimedia communication using infrastructure they already have.
PBX-based video took a breather in 2015 due to a videophone portfolio refresh at Cisco, but as of Q1 2016 the segment is returning to year-over-year growth-primarily due to a pickup in software demand.
Immersive telepresence grew for the first time in 2015 since 2011, and the recovery is extending into 2016 with Q1 revenue increasing 19% year-over-year.
On a regional basis, North America was the bright spot in Q1 2016-up 12% year-over-year-while all other major geographic regions declined. A flat outlook is forecast for the video conferencing market, with revenue of $3.2bn by 2020 and a five-year (2015-2020) compound annual growth rate (CAGR) of 0%.